The Royal Exchange has begun trading — at least officially — the first listed issuer on its platform since Listings Authority (LiA) was launched. The aim of the blockchain-based platform is to remove traditional regulatory burdens, giving issuers a level playing field for investing while simplifying the initial public offering process, without offering a guaranteed market for buyers. The target universe of issuers ranges from initial public offerings (IPOs) to new public companies, and the service is tailored to cut and remove red tape and throughefficiency.
The eight week-old platform includes 6,000 issuers globally and is used by 70 new issues in the first quarter of this year alone. Recent initial offerings of newly listed companies include pet company Pets At Home and motor company Privilege and the six companies that completed an IPO in London in May. Ten companies filed for IPO on the UK Stock Exchange in May, almost double from the seven companies who completed the process in April. The month also saw the biggest IPO for a Norwegian company in six years with Land & Buildings putting 593m shares on the market with a value of almost $3bn.
Aside from in London, listings have been held on emerging markets based in China, South Africa, Indonesia, Turkey, and, last month, the Middle East. The trading platform is fully automated and designed to prevent the need for any human intervention. Financial and legal documentation is completed on the platform, based on blockchain technology, eliminating the need for a conversion of notes into stock certificate and resolving prior disputes between the issuer and respective customers.
Derivatives markets are also now possible and regulated using the platform, and one day may even extend to the dividend payment process. Revenues derived from each each listing are also either credited to stockholders or a contingent fee to the issuer.
“We’re delighted with the positive response from all of our customers, both consumers and issuers,” explained Mike Tan, CEO and founder of Turbulent.
Before Turbulent, IPO-related registration, bidding and issuance was a costly process with numerous different services and the process determined by a number of different platforms. Many new issuance issuers did not have the scale and financial muscle to become the latest recruit on the bell-wether Reg H-100 platform. Turbulent, the first blockchain based platform to be listed, aims to unify the process of listing on all exchanges.
Prior to the official launch of the Turbulent platform in May, there were a number of existing companies that experimented with blockchain technology on a trial basis through the project Esmira. They saw the merit in offering their new issues on blockchain by creating specialised bonds which could be registered on any protocol and with no exchange linkage. However, in most cases the investors were not privy to the wealth of analysis being done by their company.
“What makes blockchain different from other crowdfunding platforms, such as Ponzi schemes, is that this platform is based on immutable, verifiable, all-inclusive nature of the blockchain,” said Tan. “For the blockchain, there is no light or dark side. There is no manipulation. However, for any other platform, there may be alternative sources of data.”
The Turbulent platform is also able to perform blockchain conversions including the completion of electronic bond issuer regulations which is the mechanism for the transaction.
An initial offering fee of just 5% of the gross proceeds of issuance has been determined by the market and applies irrespective of the value of the issue. In addition, a 3% pre-offer value assurance fee is charged to the holder of a valid order confirming he will trade the securities. Investors on the platform are placed on a perpetual order book when the share price in the regional financial market at the time of the first price announcement is opened. All investors are assigned a single transaction ticket number or bid time and date to determine the identity of the buyer. The platform’s fact-finding function identifies information gaps and countervailing concerns through deep capital market audits and that, in return, enables the establishment of a transparent distribution mechanism.